Fall of the eurozone’s saviours: Why Emmanuel Macron is following Matteo Renzi’s path to political oblivion

In May 2017, the 39-year old Emmanuel Macron was elected French president with an emphatic 62 per cent approval rating.

The Guardian described the victory as a vote for hope. Celebrating Macron’s pro-Europeanism, Germany’s Handelsblatt newspaper wrote: “There is renewed hope for the European project.” The Economist’s cover showed Macron walking on water.

Macron stirred anticipation that he would revive the moribund French economy and, from that position of domestic strength, he would bring new vigour to European integration.

Instead, just 18 months later, his approval rating has fallen below 30 per cent. Polls are beginning to reflect those low personal approval ratings. Even as Macron is making grand plans to lead a new political force into the European parliament next year, his Achilles heel at home continues to undermine him.

In May, the Macron-led La République En Marche! (LREM)/Mouvement Democrate (MoDem), with an expected vote share of 27 per cent, was 10 points ahead of the far-right Rassemblement National (RN); now, the LREM/MoDem predicted vote share at 19 per cent is behind RN’s 21 per cent.

Although still lauded abroad, Macron’s domestic fortunes have slid because he has followed dubious “trickle-down” policies, which have repeatedly failed to rekindle optimism among citizens who face economic hardship and uncertainty. Hence, somewhat opportunistically, Macron has sought to appease anxious domestic constituencies with narrow nationalistic polices.

These have also put paid to any likelihood of promoting a pro-European agenda. Macron would do well to heed the lessons from Italian prime minister Matteo Renzi’s descent into the political abyss.

Renzi was also 39 years old when he became prime minister. German chancellor Angela Merkel applauded him as a “matador”. He played to that hype, dressing as a cool rebel in jeans and trademark leather jacket.

He bragged that a dynamic Italy would act as “one of Europe’s leaders”. The Guardian saw Renzi as the man who would “save Europe’s soul”. But Renzi also adopted failed domestic policy approaches and undermined the coalitions needed to advance his agenda.

Common to both of them, and ultimately the source of their undoing, Macron and, even more so, Renzi were dealt difficult hands. They inherited poorly performing economies that bred widespread social and political discontent.

French per capita incomes have remained flat since the onset of the global financial crisis in 2007; the unemployment rate is just under 9 per cent and youth unemployment is endemic.

For most French citizens, the education system does little to help them climb the economic ladder. In all these respects, the Italian problems run much deeper. There is little evidence that Macron’s policies will promote growth. He uses a worn mantra to make a bold claim for his tax breaks for wealthy French citizens: “If you want to share the cake, the first condition is to have a cake.”

Whether tax cuts spur growth is unclear, but they always increase the sense of unfairness. Macron’s labour market “reforms”, which make it easier to fire workers, add precarious jobs with short contracts, ranging from a few months to a few hours. Businesses lose the incentive to invest in their employees, and productivity growth declines. The sense of social injustice and economic vulnerability deepens. And now, his proposed environmentally friendly diesel tax has raised a new storm.

The conservative opposition leader, Laurent Wauquiez was quick to tap into domestic angst: “You have to be completely out of touch with reality not to understand that taxing fuel is taxing those French who work.” Nationwide blockades planned for Saturday are supported by 78 per cent of French citizens. Stuck with the “president of the rich” label, Macron’s base of supporters has narrowed to successful educated professionals working and living in metropolitan cities.

Despite his youth, he struggles to attract French youth. The Macron government’s efforts to inject greater equity into the educational system is the best hope for growth and greater equality. Revamping the educational system is a generational task, however. The task is made harder by the political inability to cut back entrenched entitlements and reallocate government expenditure to education.

Hence, the prospect that Macron would be a European saviour was always far-fetched. Despite his much-hyped speeches, Macron has approached European integration with an eye to political gains at home.

That has predictably deepened European divisions. He has alienated eastern European governments by trying to restrict “posted workers”, typically employees of eastern European service providers. Although the numbers of such workers is trivially small, Macron has made the claim that their somewhat smaller pay package constituted “social dumping”, and therefore hurt French workers.

On the bitterly divisive issue of migration, French police board trains arriving from Italy to search for and remove migrants, depositing them back at the Italian border.

Search of arriving trains also undermines the Schengen system of passport-free travel across Europe. Macron’s recent sermon against an “ultra-liberal” Europe is another effort to regain domestic political support. His throwaway, “we need a Europe that protects”, either is just a slogan or requires fundamentally rethinking Europe’s open borders.

Making matters worse, by cynically hectoring Italian leaders for failing to fulfil their humanitarian responsibilities to migrants and by accusing eastern European leaders of promoting their national self-interest, Macron has worsened the hugely difficult problem of sharing migrants among European nations. With diminished domestic stature and few European allies, Macron’s much-touted initiative to strengthen the eurozone’s defences during financial crises has predictably run aground.

Although German chancellor Angela Merkel has agreed, in principle, to cooperate with Macron, resurgent German nationalism and opposition from within her conservative caucus severely limit what she can do. Other fiscally hawkish “northern” eurozone countries, notably the Netherlands, and Eastern European nations have opposed any initiative that would require them to finance other European governments. Renzi’s European agenda was limited but legitimate: he wanted to soften the fiscal rules that require austerity during economic recessions and, hence, make recessions worse. However, the hallowed rules remained firmly lodged on their pedestal.

Creating a coalition to change Europe is nearly impossible. However, as in Macron’s case, Renzi’s real failure was at home, where he too followed the traditional European recipe of “labour reforms”. He lost domestic support rapidly, especially among young Italians. Suffering high rates of unemployment from Italy’s brutal economic downturn, few Italians believed that the increasing number of highly insecure new jobs would be stepping-stones to stable incomes. Renzi’s end came quickly.

In a December 2016 referendum to endorse his proposed constitutional reforms, Italian citizens humiliated Renzi, leading to his resignation. Around 80 per cent of those between the ages of eighteen and twenty-four voted against him.

Macron enjoys important institutional advantages relative to Renzi. As president with a five-year term and a solid parliamentary backing, he remains in charge. But the very brashness that led to his dazzling ascent is causing even his most fervent admirers to part ways with him. Most recently, interior minister Gerard Collomb, France’s “top cop”, resigned after a public spat with Macron. The departing Collomb castigated Macron for “hubris” and “lack of humility.”

On economic policy, Macron’s well-wishers Jean Pisani-Ferry and Philippe Martin have warned that he needs to deal more directly with inequality and the widespread sense of lack of fairness. Macron needs to change both style and policy priorities. Otherwise France’s delicate social fabric will fray further, and in the manner of many predecessors since the illustrious Charles de Gaulle, Macron could abruptly lose all political effectiveness.

Ominously, Macron’s predecessor, Francois Hollande, was humiliated in the European parliamentary elections in 2014, a setback from which he never recovered. The looming European parliamentary elections in May 2019 – on which Macron has set such great store – could prove his undoing.

Ashoka Mody is visiting professor of international economic policy at Princeton University and former deputy director of the International Monetary Fund’s European and Research Departments. His new book is Eurotragedy: A Drama in Nine Acts